Medicare Part B Premium and Deductible: What’s in Store for 2016? October 14, 2015 National Coalition on Health Care Tricia Neuman, Sc. D. Director, Program.

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Medicare Part B Premium and Deductible: What’s in Store for 2016? October 14, 2015 National Coalition on Health Care Tricia Neuman, Sc. D. Director, Program on Medicare Policy Kaiser Family Foundation

Exhibit 1 Actual and Projected Medicare Part B Premium and Deductible, Exhibit 1 Part B Standard Monthly PremiumPart B Annual Deductible ActualProjected ActualProjected SOURCE: Kaiser Family Foundation; data from CMS Office of the Actuary and 2015 Medicare Trustees report. $159.30

Exhibit 2 In 2016, Part B premiums are expected to rise, as they often do, to meet requirements under law for total premium revenue to cover 25% of program costs and provide for adequate “reserves” in the Part B Trust Fund Social Security recipients are expected to get no cost-of-living adjustment (COLA) in 2016 – not unprecedented, but not typical either –The typical Medicare beneficiary relies on Social Security for the bulk of their income The “hold harmless” protects Social Security recipients from seeing their Social Security benefit payments decrease as a result of an increase in the Medicare Part B premium –Most Part B enrollees have their Part B premium deducted from their Social Security payment What explains this highly unusual projected spike in the Medicare Part B premium and deductible? Exhibit 2

Exhibit 3 Year 1Year 2 $1,500$1,545 – $100– $105 $1,400$1,440 Year 1Year 2 $1,500 – $100– $105 $1,400$1,395 Example 1: A Typical Year Social Security: 3% COLA Part B premium: 5% increase Example 2: No COLA Social Security: 0% increase Part B premium: 5% increase Monthly Social Security benefit Monthly Part B premium Net Social Security benefit The “hold harmless” provision prevents the increase in Part B premium and a reduction in the Social Security benefit How does the hold-harmless provision work? Exhibit 3

Exhibit 4 Most (70%) Part B enrollees will pay the same Medicare Part B premium in 2016 as they paid in 2015 – due to the “hold harmless” The remaining 30% of Part B enrollees (or Medicaid, on behalf of dual eligibles) will pay even higher premiums to generate sufficient premium revenue to cover 25% of Part B costs, with adequate “reserves” This could result in a projected 52% increase in the standard Part B premium and Part B deductible –The Part B deductible is NOT protected by the hold harmless The Bottom Line for 2016 Exhibit 4

Exhibit 5 70% of Part B enrollees held harmless from 2016 Part B premium increase 30% of Part B enrollees not protected by the hold-harmless provision  Medicare beneficiaries with Medicaid (dual eligibles)  New enrollees  Beneficiaries who are not receiving Social Security  Higher-income beneficiaries SOURCE: Kaiser Family Foundation; data from CMS Office of the Actuary and 2015 Medicare Trustees report. Most Part B enrollees (70%) are protected by the hold harmless provision, but 30% are not Exhibit Medicare Part B Enrollment = 52 million

Exhibit 6 SOURCE: Kaiser Family Foundation; data from CMS Office of the Actuary and 2015 Medicare Trustees report. Monthly standard and income-related Medicare Part B premium amounts are expected to rise 52% between Exhibit 6 Standard premium Income-related premiums Up to $85,000 $85, ,000 $107, ,000 $160,001- $214,000 More than $214,000 Income for single people For enrollees who are held harmless, 2016 premium will be $104.90

Exhibit 7 What’s Next? Exhibit 7 Social Security Administration will make an announcement about the COLA (October 15 th ) The Secretary will make a determination and announce 2016 Medicare premiums and deductibles – which may or may not be identical to those included in the Medicare Trustees’ report The new Medicare premiums and deductibles will take effect for 2016, unless the law is changed

Exhibit 8 Medicare’s Income-Related Premiums: A Data Note The Ups and Downs of Medicare Part B Premiums: Frequently Asked Questions Raising Medicare Premiums for Higher-Income Beneficiaries: Assessing the Implications The Facts on Medicare Spending and Financing Income and Assets of Medicare Beneficiaries, 2014 – 2030 Additional Resources on kff.org For more information, visit kff.org/medicare Exhibit 13